(1) Consider two countries (England and India) that can produce two goods (cloth and trains) using two factors (labor and capital). The technology to produce each good is the same in either country and allows for substitution among inputs. Cloth production is labor intensive while train production is capital intensive. England is relatively capital abundant, and India is relatively labor abundant. Use diagrams and equations/ explanations to justify your answer. (g) Suppose the two countries were trading freely for several years, do you expect to observe the same wages in England and India?

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